While U.S. Senate candidate Linda McMahon has been touting her business prowess building and running Stamford-based World Wrestling Entertainment, the state has been auditing the company to determine if WWE cut costs by improperly using independent contractors in and out of the ring.

"As far as I know, all of the (worker) classifications have been correct or if not they were brought to WWE's attention," McMahon, who resigned as CEO from her family's company in September, said Tuesday in New Haven. "Any kind of audit, a tax audit or whatever ... if you made a mistake you change it or if it's fine you leave it."

McMahon, who is financing her bid for the Senate, said she was unaware WWE was the target of a state audit, confirmed Tuesday morning in an e-mail to Hearst Connecticut Newspapers by a company spokesman.

Federal and state officials have been cracking down on companies that misclassify regular employees as independent contractors, often to avoid paying Social Security, Medicare and unemployment insurance taxes for those individuals.

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In May, Republican Gov. M. Jodi Rell signed legislation that increases fines for misuse of independent contractors from $300 per incident to $300 a day beginning Oct. 1. It is now potentially a felony.

In response to those who have criticized WWE for not offering its wrestlers health insurance, McMahon has argued the company's stars are independent contractors. But WWE also employs at any given time around 350 independent contractors behind the scenes, including models, photographers and film unit publicists, a company official said in an earlier interview.

Asked whether WWE has ever been the target of state or federal misclassification probes, spokesman Robert Zimmerman in an e-mail Tuesday morning said: "WWE has always complied with the law. Up until this election, WWE has not been fined or investigated in the past for independent contractor classification. However, curiously the state of Connecticut is currently conducting an audit of WWE's classification of independent contractors. WWE constantly reviews its internal practices and procedures to comply with ever-changing employee laws."

The scope of the audit was not known as of press time. Zimmerman did not provide further details. And spokesmen for the Connecticut departments of labor and revenue services, the two agencies that would typically conduct such investigations, said they are prohibited from confirming or denying audit activity.

Labor Department spokesman Paul Oates said the agency conducts hundreds of audits annually -- 1,979 in 2009 alone -- and reviews of worker misclassification can be launched for a handful of reasons.

"It can be a complaint. It might be through a random audit or somebody filing for unemployment benefits," he said.

Asked if she was concerned about the timing of the audit during the Senate race, McMahon Tuesday said, "It might raise an eyebrow, maybe."

The Joint Enforcement Commission on Employment Misclassification, formed by Rell and the state legislature in 2008, includes representatives from the departments of labor and revenue services along with the Chief State's Attorney, the Workers' Compensation Commission and Attorney General Richard Blumenthal, the Democratic nominee for U.S. Senate and McMahon's opponent.

In a report issued in February, the commission stated that "employee/worker misclassification may sound like a mere paperwork issue, (but) the act ... is a serious and significant problem" that results in unfair treatment of workers, gives the guilty company an unfair competitive advantage through artificially lower costs of doing business and "means our law abiding taxpayers bear more of the tax burden."

Blumenthal's office Tuesday said it was not involved in any audit of WWE. According to state policies the Attorney General's office would become involved should the Labor Department or another state entity determine the law has been violated.

A trio of WWE wrestlers -- Christopher Klucsarits, Scott Levy and Michael Sanders -- a few years ago unsuccessfully sued the company in U. S. District Court in Connecticut for defining them as independent contractors.

Zimmerman said WWE takes good care of its talent.

"The average WWE performer earns more than $550,000 annually while only wrestling less than three days per week," Zimmerman said. "WWE covers 100 percent of all costs associated with any in-ring related injuries and rehabilitation."

But Irv Muchnick, an independent journalist and author in California who has covered professional wrestling and been a vocal critic of the McMahons and WWE, said in an e-mail that the state audit was long overdue.

"With the financial success of the McMahon family reaching the point where it is now underwriting a `self-funded' Senate campaign, while the public fallout of their corporation's occupational health and safety standards continues to go unaddressed by government, it is entirely appropriate to be taking a fresh look at all this," he said.